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Osprey SOL + Staking ETF: A Breakthrough in Yield-Generating Crypto ETFs

Adam Sand
Adam Sand
July 2, 2025
3 min
5 min read
July 2, 2025
5 min read

Coindesk and others reported on today's launch of the REX-Osprey SOL + Staking ETF, highlighting its pioneering approach as the first U.S. exchange-traded fund to combine crypto exposure with on-chain staking rewards. Trading on the CBOE and structured under the Investment Company Act of 1940 (‘40 Act), the fund offers investors access to Solana (SOL) while earning yield from staking. This is a watershed moment in digital asset finance because staking yield is no longer limited to wallets and validators.

Smart Structuring to Unlock Staking

To sidestep the long regulatory bottlenecks of the ‘33 Act spot ETF route, Osprey and REX opted for the more nimble ‘40 Act structure. They created a C-corporation that owns a Cayman-based subsidiary, which in turn acquires and stakes SOL tokens. This clever structuring enabled the ETF to launch faster and earn SEC clearance with a “no further comment” letter.

The result? Institutional-grade exposure to SOL, with staking yield, wrapped inside a regulated, listed fund. It’s a huge step forward in making staking mainstream and accessible via trusted financial rails.

Taxation and Legal Friction

While fast, this C-corp route has its drawbacks. As The Block outlines, C-corporations are subject to corporate tax, meaning some of the staking rewards could be liable for taxation before being realised by shareholders. And while the SEC had no further comment about the fund’s launch, this sparks an intriguing dialogue about the opportunities for innovation in fund compliance with ‘40 Act requirements, especially around asset composition and disclosure.

Ultimately, it's a practical solution that allows for the introduction of staking to the market right now, with exciting opportunities for future enhancements.

More Efficient Staking ETFs Are Coming

Encouragingly, the Osprey ETF may only be the beginning. Bloomberg’s James Seyffart recently noted that grantor trusts, the structure used in today’s spot Bitcoin and Ethereum ETFs, may soon be permitted to include staking. If approved by the IRS, this would allow ETF sponsors to pass staking income directly to shareholders without triggering corporate tax obligations.

This would remove the biggest efficiency drag from staking ETFs and enable more streamlined product designs with broader market appeal.

The Legislative Tailwind: CLARITY Act and Beyond

This shift toward efficiency is being propelled by a wave of pending legislation. Chief among them is the CLARITY Act, introduced in May 2025, which aims to:

  • Divide digital asset oversight between the SEC and CFTC

  • Provide clear definitions for digital commodities, investment contracts, and staking activities

  • Codify that non-custodial, protocol-based staking is not a securities offering

Alongside this, other crypto-relevant bills are gaining momentum:

  • The FIT21 Act aims to modernize market oversight for digital assets

  • The GENIUS Act establishes the first federal rules for stablecoins

  • The Digital Commodities Consumer Protection Act (DCCPA) brings greater clarity to exchange and custody regulation

  • IRS Revenue Ruling 2023-14 and anticipated follow-up guidance will determine how staking rewards are taxed, especially in ETFs

Of course, not all of these bills will become law, but it is clear that the legislative and regulatory environment is increasingly pro-clarity, pro-infrastructure, and pro-innovation. Osprey is the vanguard, but the next generation of staking ETFs will likely be faster, simpler, and more tax-efficient.

Bottom Line: The Osprey SOL + Staking ETF is an exciting breakthrough. It unlocks staking yield for ETF investors using creative structuring and regulatory navigation. Even better, a suite of legislative and tax changes is lining up to make these kinds of products simpler, leaner, and more mainstream. This is how crypto goes institutional.